ATM Fraud: What Safeguard For Bank Customers?

The Automated Teller Machine (ATM) is a new-age electronic device that facilitates off-site banking transactions. It is convenient, stress-free and utilisable at any location where it is installed.

Financial analysts note that, just few years after its introduction into the nation’s banking system, the experiences of bank customers are diverse and varied.

While some customers applaud the innovation, others narrate tales of woe in their use of ATMs for banking transactions.

Mrs Joy Agu, a media practitioner in Lagos, says that she once withdrew N40, 000 from her account through the ATM service, only to receive an alert on her mobile phone, indicating a much higher withdrawal.

She dashed to her bank to lodge a complaint and found out that she had been defrauded. The fault was hers, as she was careless with her Personal Identification Number (PIN), which was spied on by loiters around the ATM machine.

Agu, like many other bank customers, thinks that banks should monitor activities around the ATMs installed within their premises, so as to keep loiters away.

Observers say that incidents of fraudulent withdrawals from personal accounts via the ATM abound across the nation.

Bank officials are themselves worried about the upsurge in ATM fraud.

Says Joseph Oyewole, a bank worker: “Some customers are so scared now. They do not even bother to renew their ATM cards once they are expired.’’

Oyewole points out that there is a seeming decline in the use of ATM facilities by customers.

Another banker with a first-generation bank expresses the viewpoint that, “most of our customers are not discreet enough with their PIN and so, fraudsters take advantage of such carelessness to hack into their accounts and defraud them.”

However, the police say that they are working hard to stem the crime.

The Lagos State Police Command recently held a five-day intensive training programme on cyber and other related crimes for 68 of its officers and men.

Mr. Moses Saba, a Commissioner of Police, who heads the Special Fraud Unit (SFU) of the command, confirms that “there are incessant cases of ATM fraud which is alarming but we are determined to confront them head-on.

“With the active cooperation of a bank in Abeokuta recently, a trap was set and two suspects fell into our net as they had gone for a fraudulent transaction,” he discloses.

Saba recalls that in that operation, a card-cloning machine, two laptops and other documents were impounded in the home of one of the suspects.

The police boss alleges that the suspect is responsible for a series of spam mails, asking unsuspecting customers to forward their card details, on the pretext that their banks demanded it.

Saba expresses worry about the international dimension to the crime, as some suspects had reportedly confessed that some foreigners, who were linked online, built fake websites of banks for them.

He adds that the cloning machine, recovered from the suspect was purchased from an Asian country.

Keen watchers of the banking system say that the fraudsters are becoming more determined, taking their criminal activities to a greater dimension through the Internet.

They say that the fraudsters, in their nefarious trade, send scam mails to unsuspecting victims, claiming that such mails emanated from the Central Bank of Nigeria (CBN) or Inter-Switch Nigeria.

The nation’s apex bank, on several occasions, had dissociated itself from the activities of these fraudsters.

CBN’s Corporate Affairs Manager, Mr. Mohammed Abdullahi, describes the trend as ‘unwholesome’, saying that the public should be very vigilant.

“The CBN is not in any way directly involved in the day-to-day operations of the Automated Teller Machines.

“It is also not involved in any ongoing ATM upgrade or any related activities that requires customers to reveal their PIN codes or passwords as being circulated through the scam e-mails,” he says.

The CBN, in a proactive measure last year, directed all banks to hand over their numerous offsite ATMs to an appointed ATM consortium of operators.

It set a deadline of June 30 for the handover, while bids were invited from financial firms interested in taking over the ATMs.

Many stakeholders, who saw it as a bold step at sanitizing the banking industry, hailed the action.

However, due to several appeals from the banks and the need to put the consortium in place, the CBN extended the deadline to March 31, this year

About a month after the expiration of the deadline, records available from financial institutions indicate that many banks have begun to comply, as an estimated 1,446 ATMs have been handed over to the consortium of firms.

Mr. Mitchell Elegbe, is the Managing Director/Chief Executive of INTERSWITCH, a major player in the ATM support system.

He says that his company is deploying all available resources to tackle fraud in ATM management in the country.

He stresses that his firm has launched an enlightenment campaign on ways to minimize fraud in the system, as well as tackle other challenges posed by the new innovative technology.

According to Elegbe, current efforts, assisted by security services, have led to the closure of some fake websites used by the fraudsters.

“Our company has put in place an IT Risk and Fraud Management Team, alongside other fraud prevention initiatives, such as ‘MoneyGuard, ‘FraudWatch, ‘FraudGuard, ‘FraudInsure, ‘IdentityGuard and ‘FraudAware’, “ he says.

Elegbe adds that his company has introduced the “VERVE”, a more secured CHIP/PIN card, which replaces the magnetic strip card being phased out.

These measures, financial experts affirm, are adequate response to the CBN’s directive to upgrade the country’s present Magnetic Strip card payment system.

Security experts note that the “VERVE” has many security features which make card cloning activities very difficult for now.

Elegbe says that most banks are presently replacing millions of their old cards in circulation.

An anti-fraud expert, Mr. Alex Oku, who heads the Lagos-based Kalex Global Solutions Ltd., says that “high-definition” ATM cards are very ripe for the Nigerian market, in view of fraud trends in the nation’s financial system.

He says that the ultra-modern card, now being used in a country like the United Arab Emirates (UAE), works with fingerprints of account owners and totally eliminates the use of PIN.

The challenge to curtail fraud in the financial system is daunting and calls for the collaboration of all stakeholders.

The Consumer Protection Council (CPC) is one such body that has risen to the challenge and it has entered into a joint initiative with the CBN and commercial banks, to stem the rising incidents of fraud in the financial system.

Some analysts recall that recently, their tripartite efforts paid off, with the recovery of huge sums of money defrauded some bank customers in Anambra.

The South Eastern Zonal Co-coordinator of the CPC, Mr Tam Tamunokoubia, says it is imperative for banks to resolve any reported ATM complaint within 72 hours.

He advises that customers must learn to keep their cards from unscrupulous persons, keep their PIN very confidential and avoid careless disposal of ATM transactions receipts.

With cautious optimism, stakeholders in the financial system hope that the innovative measures being implemented by the CBN and the commercial banks will minimize the losses sustained during banking transaction through the ATM.